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Strategies & Market Trends : DAYTRADING Fundamentals
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To: TFF who wrote (17363)7/4/2005 10:19:48 PM
From: Eric P  Read Replies (1) of 18137
 
Impressive Returns. Is that based on capital @ risk? or intial capital without leverage? do you use leverage?

Have you considered starting a hedge fund? high return with a low drawdown is the ideal in that environment.

The returns are based upon initial equity for the year. I do leverage, as high as 4x daytrading buying power when the opportunities allow. This year unfortunately, opportunities have been scarce and I'm rarely able to find enough trades to reach 3x margin intraday.

I ran a hedge fund for about two years and don't think I'll ever do it again. There are several major drawbacks to running a hedge fund:

1) It becomes very tough to find ways to put all of your capital to work (daytrading) when you have several million in capital. Your timeframe must become longer, or you must begin trading in the most liquid of instruments, which are also the toughest to trade, IMO.

2) You have to deal with client issues that are not a factor for an independent trader.

3) You only keep 20% of the profits.

The only way I would consider running a hedge fund again is if I found a way to make consistently high returns on ~$20-50MM+ in capital. For smaller amounts of capital, the issues above make it undesirable, IMO.

Does anyone else on this thread currently run a hedge fund? If so, what has been your experience?

-Eric
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